State pensions should come from taxes. Private pensions are just people's savings. I don't want interest based banking.

drewboy wrote:

Cheques. The main reason people get charges is writing cheques, KNOWING they will go overdrawn.

That's a fair point. People shouldn't do that.

drewboy wrote:

Why should a company providing a service provide it for free? Every singe banking transaction costs money. Why should that be a right?

I see no need for private banks. It's a fairly radical reformist view, and I accept that. A single, independently run, interest free, state bank paid for by taxes would be sufficient.

drewboy wrote:

Why should someone get to abuse someone elses money? I have yet to hear anyone give a reason why that should be OK.

You misunderstand me. I don't want any abuse of other people's money. I want to see the end of an unstable system that profits through exploitation. That exploitation being the creation of debt based money in fractional reserve banking. It's detrimental and unnecessary.

drewboy wrote:

Oh, and we had recessions WAY before banking becamse a major commercial venture.

Accepted. I think debt based societies run greater risks.

drewboy wrote:

And how can the governtment afford that after you JUST pointed out its debt problems?

They've backed themselves in a corner. It would take decades or centuries of policy change to safely change things. I have little faith that it will happen in my lifetime. Most people have no interest. (bad pun)

In which case I'd rather see bank penalties remain than lose free banking.

If there was ever a state bank...I would take my money out and put it under the mattress...sorry, cannot go with that view!

Hence it being independently run. Just like the Bank of England is now. It would merely be an extension of the BoE with different mechanisms. I don't hear much complaint about our currently nationalised BoE which has plenty of power.

The retail banking arm is not just about current accounts either; it includes credit cards, mortgages and loans. When the retail division balances its books, it will take all these things into effect and that's all the city is interested in.

Retail banking is generally the second most profitable part of a banking operation. If you look at the top line financial results for any of the big five, it's doing very well, thank you.

I don't disagree that penalty charges are valid. I do disagree with this whole "they make no money from current accounts" debate. If current accounts traded as an individual business, the argument would hold. As it is, it doesn't.

The analogy was used more to show that they are different strategic business units, I am aware they are not seperate companies. However, my point remains that although the banks will announce its profits to cover pretty much the whole company, each unit will have to turn a profit in it's own right.

I have not seen the figures that back up what you say bout the Retail section Phil, so won't comment.

However, looking at the Current Account report in Mintel, they state that the Current Account is the biggest product penetration of any product and is the banks main way of penetrating other markets through cross selling. With companies currently offering stupid levels of interest on money transmission accounts (effectively creating loss leaders) to attract customers to THEN get the profit spinning products (mortgage, insurance, personal loans, credit cards etc). I highly doubt they are making MUCH money from them. I don't believe I said they were making a loss, but I did contest that fact that they were making huge profits from that one product.

(p.s - I have put mortgages in with the 'money spinning products' however a lot of the time they are used for loss leading in much the same way as current accounts)

I borrowed money from a bank called HFC about five years ago. I paid it back in a year.

They have harassed me ever since trying to get me to take out loans, sent out credit cards and chequebooks. I have told them I not interested and to be taken off their lists but they dont listen. The management are just interested in meeting targets and *Bad word* the customer, they can get into all sorts of debt for all they care.

The analogy was used more to show that they are different strategic business units, I am aware they are not seperate companies. However, my point remains that although the banks will announce its profits to cover pretty much the whole company, each unit will have to turn a profit in it's own right.

Is that true? You can't always have a business where every part turns a profit. Sometimes, a unit can run purely as a cost because the P + L account knows that the "cost" drives revenue into the other streams. I think this is the point that you were making about current accounts but I got a bit confused so apologies if we're arguing the same point!

I think as far as bank charges go, to me, they are fair and reasonable because they are entirely avoidable and essentially they are a 'penalty' abusing the bank's funds. What I don't hold to is this suggestion that they are justified by keeping the current account side of things profitable, because that's a red herring.

I think we are kinda on the same point Phil, however where you say that the fee's are justified to keep the accounts profitable, I would say that losing them will, to the bank, justify introducing other fee's to stop them operating at a loss.

An SBU is usually quite seperate within an organisation, depending on the size. Usually, they will have the requirement to operate at profit. If they are running one at a loss for the benefit of another, I would argue that they are really not SBU's. Correct me if I am wrong, but would BT Wholesale and Retail not be classed as quite seperate within BT as a whole?

I think we are kinda on the same point Phil, however where you say that the fee's are justified to keep the accounts profitable, I would say that losing them will, to the bank, justify introducing other fee's to stop them operating at a loss.

I didn't say that - I said the opposite. The fees are NOT justified on the grounds of profit. That's my whole point.

An SBU is usually quite seperate within an organisation, depending on the size. Usually, they will have the requirement to operate at profit. If they are running one at a loss for the benefit of another, I would argue that they are really not SBU's. Correct me if I am wrong, but would BT Wholesale and Retail not be classed as quite seperate within BT as a whole?

An SBU is driven by strategy (hence the name) not profits?

All businesses have a requirement to run at a profit at the level at which the profit and loss account is reported. None of the big five banks shows P + L against current accounts. They all report against retail banking, which includes current accounts, mortgages, savings and loans. Current accounts are a proven tool to feed the others. Ideally, they would turn a profit (and overall, I'm sure they do) but I've not yet seen a bank justify its charges on the basis that they feed profits. Indeed, their whole argument is that they cover costs!

Correct me if I am wrong, but would BT Wholesale and Retail not be classed as quite separate within BT as a whole?

Yes - but that's at P + L level and is driven by regulatory constraints which makes it an inappropriate comparison.

BT Payphones (within BT Retail) would be a better comparison. Makes very little profit but maintains the brand profile and the licence restrictions. Not reported at P + L level but managed as a distinct SBU.

As an ex HSBC emloyee of more than 6 years..i can honestly say that altho i agree with bank charges if customers do not stay within their limits...charges on the whole are highly unjustified..

When i worked for the HSBC customers who complained about their charges were told that the fees they were charged related to the hourly wage of the member of staff who had to deal with the charge..returning a cheque unpaid or "bouncing" a direct debit back then would cost approx £25.

But...the returning or "bouncing" process literally took minutes to perform..a button was pressed or forms were passed which take no more than 5 minutes to process..

so on that basis..they were saying that the staff were paid £25 for 5 minutes work..£300 per hour!!..me thinks not

A member of staff back then who would perform these operations was paid no more than £12 per hour..so the justification of the charge was completely ridiculous.

The Abbey charges £35 to return an item unpaid or £20 for allowing an item to be paid when funds are not available..and IMHO this is totally unjustified..just makes their Xmas Party table more appealing.. LOL

Thats not the only part of the cycle that will encur charges though, ie the person who actually hits that button?

I'm not saying that the banks encur a what the charge down to the last penny, but these things add up right down to the call centre agent who has to spend half an hour trying to appease customers. And the BACS system levies charges too.

However, if you were told to say that it covers the hourly wage of an HSBC bank then thats the fault of that banks policy. I never said that when I worked customer service.